RAMESH PBAuthorised Training Partner - PMI for PMP & PMI-ACP| educationChennai, Tamil Nadu, India
Is there a method of measuring team cost per hour and team benefit per hour. Typical earned value measurements do not answer this. I think something like this should provide guidance on when benefits begin to get tapered off, when projects needs to be called off and when projects would begin to go over budget. Any thoughts on this ? Saving Changes...
Total People Cost / by Total Hours Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
If I understand correctly, Ramesh:
Team Cost Per Hours = Sum of all Team Costs / Sum of Hours Worked
Team Benefit Per Hour = Sum of all Team Benefits / Sum of Hours Worked
As far as whether they are good project performance indicators, I would say it depends on the type of project. For example, in a fixed price project, I would definitely be interested in keeping my team benefit per hours above my team cost per hour. Saving Changes...
Tariq JavedProgram Manager| Government of PakistanIslamabad, Federal Capital, Pakistan
I agree with Stephane Parent and would like to add that tappering of benefit needs to take into account the phases of project as well if it is the culminating phase then its fine otherwise caution be exercise not to demotivate the team. Saving Changes...
Many factors make it difficult. First the industry you evolve in, and second the type of contract you have with suppliers.
I think also you might want to have benchmark that would let you see from previous project that at a given stage the ratio is positive or negative before sounding any alarm. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
You have not measure cost or benefit. You have to meassure value. But because value is a subjective matter you have to make this objective once. That is your duty. And it is not easy indeed. Saving Changes...
Anonymous
Thanks Sergi, Vincent, Tariq, Stephan, Mounir for your thoughts. I am talking about projects that do not come to an end. New investments are made and benefits are assumed. And until 'ALL' requirements are met, deliverables are not complete. Timeliness is never a requirement. Why is Time not considered a deliverable at all. Recently I asked a project manager when his project got extended as to whether he had any idea how much each hour costed. He had no idea. Again he had no idea of the 'value' of extension. As long as we dont know the cost per day, cost per day of extension, what type of decisions would we be able to make and how would we measure against benefit. Just interested in knowing if any of you saw any tool with a dashboard feature that measures cost per day of extension. I agree with Stephane, Mounir and Tariq about the method of calculation, but it is never done as an accepted projected metric anywhere. Vincent is 100 % right when he talks about benchmarks rates but projects are too dissimilar and too complex to be adjusted in an analogous manner. I also agree with sergio that measuring value is not easy. This question continues to intrigue me. Saving Changes...
RAMESH PBAuthorised Training Partner - PMI for PMP & PMI-ACP| educationChennai, Tamil Nadu, India
Thanks Sergi, Vincent, Tariq, Stephan, Mounir for your thoughts. I am talking about projects that do not come to an end. New investments are made and benefits are assumed. And until 'ALL' requirements are met, deliverables are not complete. Timeliness is never a requirement. Why is Time not considered a deliverable at all. Recently I asked a project manager when his project got extended as to whether he had any idea how much each hour costed. He had no idea. Again he had no idea of the 'value' of extension. As long as we dont know the cost per day, cost per day of extension, what type of decisions would we be able to make and how would we measure against benefit. Just interested in knowing if any of you saw any tool with a dashboard feature that measures cost per day of extension. I agree with Stephane, Mounir and Tariq about the method of calculation, but it is never done as an accepted projected metric anywhere. Vincent is 100 % right when he talks about benchmarks rates but projects are too dissimilar and too complex to be adjusted in an analogous manner. I also agree with sergio that measuring value is not easy. This question continues to intrigue me. Saving Changes...
Anonymous
Hi Ramesh
I am really at a loss and not sure what you are looking for anymore.
"Projects that do not come to an end" - this is a major issue of scope definition, requirements, lack of change control, among many other things - knowing the cost per hour or day could help but this is not the key issue. If you pursue this route, you will only touch on the symptoms and not the core problem.
The formulas we gave you are simple, if they are not used then I am not sure what else would help.
It sounds like you are operating in an organization that does not do project budgeting per say but operating budgets, where internal resources are not booked to the project.
In my view - you need to identify the core issues and follow them if you have the authority. Saving Changes...
Anonymous
Dear Mounir,
You would be answering me, if you can answer yourself these following questions: Can you know what is your cost per hour and your team's cost. Mind you, what you get is not what you cost. And what you book to the project is also not what you cost. Your costing methods are over simplistic. For instance, you should not just estimate cost of your effort and ignore the delays of dependent causes - either your delays or delays caused by others that may impact you. This way if you can estimate cost of one day's delay, or one day's extra work you will know how this will impact the profitability of your design and development decisions. It would also let the customer decide whether his endless scope additions are worth the cost. Without this type of costing you can call your decision making groping. Either you are undercharging or overcharging the customer; or may be idling out or overtiming your team. The point I am trying to make is that timeliness is an important deliverable, as important as any other deliverable; and that in the absence of a correct costing metric for every hour of delay, we are eroding value to the customer and letting schedule to slip indefinitely. Saving Changes...
Anonymous
Anonymous
Now, I am leading a company, and we have a small team, so we mostly work on operational activities. However, when I did work on projects in the oil & gas industry, we definitely knew our internal costs, daily rates, and even our contractor costs. Otherwise, we could not be in business. Our project estimates were based on engineering hours, construction hours, and supervision. Even corporate - management overhead was estimated based on annual operations. Saving Changes...
